Sonoma County Board of Supervisors approves two deals to lower county payroll expenses

BRETT WILKISON

THE PRESS DEMOCRAT | March 19, 2013

The Sonoma County Board of Supervisors on Tuesday took its first independent action to rein in pension costs, unanimously approving a pair of deals that lower payroll expenses for more than 60 percent of the county workforce.

The deals include a 32-month contract with the county's largest labor union and a compensation package for its highest paid employees, including elected officials, department heads and managers.

Service Employees International Union Local 1021, which represents about half of the county's 3,500 employees, ratified the contract in a tight vote last month.

The two deals alone could achieve more than three-quarters of the $150 million pension savings the county says it needs over the next decade to make its retirement system sustainable.

Supervisors said Tuesday's action made good on their pledge to seek a balanced solution to one of the county's main fiscal woes. The next step is talks under way with the remainder of the workforce, including sheriff's deputies and other public safety workers.

"The bright light of the future has to be the county being in a fiscally sound place so that we can all benefit," said Board of Supervisors Chairman David Rabbitt, referring to taxpayers and employees. "The two have to coincide."

Union sentiment Tuesday was mixed. Some members backed the deal while others criticized its concessions and took aim at compensation terms for top officials.

The SEIU contract balances a continued short-term salary freeze with 3 percent in future-year wage gains. It offsets some of the pension cuts with additional help on health care expenses.

The average annual cut to total compensation over the period is 2.25 percent, below the county's initial target of 3 percent.

By comparison, the Board of Supervisors is set to take an overall cut of 8.5 percent. The reductions for department heads and managers, even after a parallel salary bump of 3 percent, are at 6.8 percent and 5.1 percent, respectively. The county supervisors, whose salary is not tied to the package, will not receive a pay increase.

"It's hard to criticize what we came out with in the end," said Tim Tuscany, a psychiatric nurse and bargaining team member for SEIU. The union represents many of the lowest paid employees in county government, including rank-and-file workers in most county departments except for public safety divisions. The 1,700 workers account for about $200 million of the county's $490 million total payroll.

On the other side, the 600 top officials and unrepresented employees covered under the "salary resolution" approved Tuesday account for $112 million of the payroll.

Combined, the deals for the two groups will save about $19.7 million through late 2015.

The compensation overhaul is aimed to permanently reduce labor costs after years of declining or flat tax revenue, lower long-term pension liabilities -- now at $353 million -- and free up funds for a range of government services.

The changes were set in motion nearly 16 months ago and faced a number of possible obstacles. But state action last year on overhauling pensions helped the county clear one hurdle, setting lower benefit tiers for new employees.

And in their vote last month, 52 percent of SEIU-represented workers agreed to the county's more extensive pension changes, including a greater share of their paychecks going to cover pension premiums.

Several supervisors hailed the agreement as a significant achievement.

"This is a bold first step to reset the county's compensation costs for the long term," said Supervisor Mike McGuire.

The actions would scale back pension-eligible pay to include salary, a smaller number of job premiums and some cash and job-related allowances. It would eliminate from retirement calculations various cashouts of accrued leave, end-of-career bonuses for department heads and other pension-spiking opportunities.

A Press Democrat analysis last year showed the extra compensation adds an average of more than 12 percent to pensions for county employees, or more than 14 percent for sheriff's deputies and other public safety workers.

Those perks, plus stock market losses and richer benefit formulas approved in 2002 have driven up taxpayer costs for the county retirement system by more than 400 percent since 2000. Including payment on pension debt, annual taxpayer costs are now about $97 million, or about 20 percent of total county payroll. They were set to climb to 30 percent without any changes.

The county's long term goal is to bring them back down to 10 percent.

Fiscal watchdogs have called for deeper and quicker moves, including unilateral changes to benefits for current workers that would likely run afoul of legal rulings. They were not among the eight speakers -- all union members or county retirees -- who addressed the board Tuesday.

Several SEIU members said the shift in take-home pay to pensions was a bitter pill to swallow, especially in the face of rising medical insurance costs, up more than 23 percent since 2011 for the Kaiser plan used by three quarters of county government workers.

"If I had kids on my plan, I couldn't afford to be a county employee," said Martha Stiles, an account clerk in the county's Health Services Department who made about $60,000 last year. Some lower paid workers with families have switched to state-sponsored coverage for their children, she said.

Under the SEIU contract, the county would increase its health care contributions, making monthly payments starting at $100 to health reimbursement accounts for dependent coverage.

The measure signals a reversal of sorts of a controversial 2008 medical benefits rollback. It is being challenged in federal court by county retirees, who had benefits reduced to $500 a month.

"The hard part of being on the board is you inherit previous board actions," she said.

Some SEIU members continued their protest of a perk temporarily restored last week for top officials.

A board contingent led by McGuire and joined by Zane and Supervisor Susan Gorin -- all of whom were backed by SEIU for office -- bowed to their calls and pushed the board to revisit the decision on deferred compensation accounts.

The perk, mostly an executive-level benefit and long a target of union campaigns, is set to end for all other workers this year but was partially extended for a year for top officials because of a legal conflict with granting those employees an offset through health reimbursement accounts.

County staff cast doubt on whether there is a suitable, non-pensionable alternative.

Lou Maricle, vice-chairman of the group representing the county's 440 administrative managers, said his unit expected the pushback from SEIU but didn't want a fight.

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Supervisor Efren Carrillo lamented that the benefit became a wedge issue for rank-and-file workers.

"It's almost like nobody is happy until everyone is unhappy," he said. "That really is a terrible place to be in."

Gorin, the board's rookie, but one seasoned by tough labor talks with public safety unions as a Santa Rosa city councilwoman, said the county's most difficult negotiations could lie ahead.

"As complicated as it is, this may be the easiest part of the discussion," she said. "We've only achieved 77 percent of the savings. We still have work to do."

You can reach Staff Writer Brett Wilkison at 521-5295 or brett. wilkison@pressdemocrat.com.